FHSA vs TFSA

Last updated: February 13, 2024

What are the main differences between an FHSA and a TFSA?

A first home savings account (FHSA) and a tax-free savings account (TFSA) are both registered accounts that can be used to save money and make tax-free withdrawals. But the main difference is that an FHSA is designed to help first-time homebuyers purchase a home, whereas a TFSA can be used for any savings purpose, and funds can be withdrawn from it at any time. An FHSA also allows tax-deductible contributions, whereas TFSA contributions are not tax-deductible.

It’s also important to note that FHSAs and TFSAs are separate accounts with different contribution limits:

  • With a TFSA, your contribution limit starts the year you turn 18 – this is provided you’re a Canadian resident. The annual TFSA contribution limit is $7,000 for 2024. But if you’ve never contributed to a TFSA before – and were at least 18 in the year 2009 and resident of Canada throughout that time – then your total contribution limit could be up to $81,500.
    Learn more about TFSA contribution limits and withdrawals

  • The annual FHSA contribution limit is $8,000 with a lifetime maximum of $40,000. Unlike the TFSA, you accumulate contribution room only after you open an FHSA account.
    Learn more about FHSA contribution limits

Note: There are penalties for over-contributing to your TFSA and FHSA. Talk to a tax advisor to ensure that any contributions you make are within your contribution limits.

FHSA

Eligibility
First-time homebuyers living in Canada.

Contribution limit?
$8,000 per year with a lifetime limit of $40,000.
Learn more

Maximum withdrawal
You can withdraw as much as you like from your FHSA. However, there are penalties for taking a non-qualifying withdrawal.

Tax deductible contributions
Yes, up to your contribution limit.

Tax-free withdrawals?
Only if you’re buying a qualifying home.

See rules.

TFSA

Eligibility
Canadian residents 18 or older.

Contribution limit?
$7,000 for 2024, but you may have more contribution room if you haven’t contributed in previous years. Learn more

Maximum withdrawal
You can withdraw as much as you like from your TFSA. Any amounts you withdraw will be added back to your contribution room in the following year.

Tax deductible contributions
No.

Tax-free withdrawals?
Yes.

See rules.

Can I transfer funds from a TFSA to an FHSA?

No. There is no mechanism for doing a direct transfer from a TFSA to an FHSA. However, you can withdraw money from your TFSA, tax-free, and contribute it to your FHSA, and get a tax deduction. This is provided you have available contribution room in your FHSA. Withdrawals from your TFSA in the current year regenerate TFSA contribution room the following January 1.
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